The huge drop in income was forced by the government who demanded a 1% rent reduction across the board – saving millions in housing benefit payments in the process.

Kirklees Council’s Cabinet has investigated leaving the two services alone but has concluded the status quo is not viable.

Clr Cathy Scott, Cabinet Member for Housing, said given the changing funding of councils, a merger provided the best opportunity for maintaining the service while saving taxpayers’ cash.

She added: “This has been an extensive process of narrowing down options and fully investigating the ones we thought were most viable.

“We have consulted widely with tenants and residents groups, employees of both KNH and Building Services, political groups, trade unions, the KNH board and the wider public and schools through an online survey.

Clr Cathy Scott

“These are two high performing organisations and they would merge to build on those strengths and improve still further.

“I am now confident that the merger is the right plan in principle, and we need to move quickly now to set out the clear contractual arrangements and expectations that will need to be in place.

“Given the financial climate we face, I believe this is the best opportunity we have to meet three aims of improving housing services across the district based on high quality service to tenants, identifying the efficiencies which will help us address the challenge of the 1% annual rent reduction we have to deliver, and supporting the council in our overall strategic objectives.”

Kirklees Council’s Cabinet will discuss the option at its meeting on Tuesday.